It’s perhaps an opportune moment to think about risky bank stocks to sell. In the aftermath of a tumultuous week in the U.S. financial landscape, where inflation spikes and weakening consumer spending stirred uncertainty, the Federal Reserve maintained caution on interest rate cuts. Hence, investors need to navigate the precarious banking sector, honing in on bank stocks to sell.
In this volatile climate, the S&P Bank index is down 13% year-over-year (YOY), starkly contrasting the robust 22.4% gain in the broader benchmark S&P 500 index. As traders seek opportunities in market lows, separating the wheat from the chaff becomes imperative, especially with the looming threat of an industry downturn.
Having said that, let’s look at three specific bank stocks to sell amidst these uncertain times.
NewtekOne (NEWT)
NewtekOne (NASDAQ: NEWT), a financial services provider tailored for small and medium-sized businesses, is buckling under the pressure of the current business environment. This is reflected in its dismal stock market performance, with NEWT stock down more than 43% YOY along with a staggering 40% decline over the past five years.
Its disappointing third-quarter (Q3) earnings report sent ripples through investor confidence, with its revised full-year 2023 EPS guidance now hovering at a lackluster $1.60 to $1.80, sharply missing earlier projections and analyst estimates. Delving into performance metrics reveals a concerning annual EBITDA growth rate of negative 54.90%, deviating substantially from the sector median of 10%. Likewise, its forward dividend per share growth paints a bleak picture, showing a negative 38.7% compared to the sector median of 4.3%. Amidst these struggles, total assets have seen a substantial dip from $1.44 billion to $1.38 billion.
PacWest Bancorp (PACW)
PacWest Bancorp (NASDAQ:PACW) finds itself at a crossroads, grappling with the aftermath of the regional banking crisis. The decision to merge with Banc of California was initially perceived as a strategic move, promising a premium value. The deal ended up sending the stock lower than before the merger was announced, resulting in a decline in investor confidence.
Unfortunately, the challenges facing PACW extend beyond the merger. The stock suffered a staggering 71% loss in value last year, marking a significant downturn due to its underwhelming performance and the unattractive post-merger scenario. Moreover, Q3 non-GAAP EPS plummeted to negative 31 cents, missing estimates by a substantial margin. Coupled with a 53.3% YOY decline in revenue to $174.54 million, the outlook remains grim.
KeyCorp (KEY)
KeyCorp (NYSE:KEY) might catch the eye with its 5.8% forward dividend yield, but theres more than what meets the eye with KEY stock. Over the past year, a significant 26.3% drop in stock price paints a sorry picture. The latest quarterly report accentuates these concerns, revealing an alarming 88% YOY drop in income from $356 million to $30 million in the fourth quarter of 2023.
Adding to the challenges, KeyCorp reports a modest 0.14% return on assets, indicating limitations in offering lucrative loan opportunities. Despite a marginal increase in net interest income from $923 million to $928 million, the $5 million increase failed to offset the impact of higher borrowing rates imposed by the Federal Reserve. With a substantial 62.9% decrease in forward dividend per share growth, lagging significantly behind the sector median at 1.59x, KeyCorp’s financial indicators raise concerns, prompting caution.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
